Greg Clark's New Book: "A Farewell to Alms"

Greg Clark's new book may be right, may be wrong, but it is brilliant--the pre-industrial chapters may well be the best short treatment of the topic ever.

Nicholas Wade reviews:

Review - A Farewell to Alms: For thousands of years, most people on earth lived in abject poverty, first as hunters and gatherers, then as peasants or laborers. But with the Industrial Revolution, some societies traded this ancient poverty for amazing affluence.... Gregory Clark, an economic historian at the University of California, Davis, believes that the Industrial Revolution ... occurred because of a change... people gradually developed the strange new behaviors required to make a modern economy work. The middle-class values of nonviolence, literacy, long working hours and a willingness to save.... Because they grew more common in the centuries before 1800, whether by cultural transmission or evolutionary adaptation, the English population at last became productive enough to escape from poverty, followed quickly by other countries with the same long agrarian past....

“This is a great book and deserves attention,” said Philip Hoffman, a historian at the California Institute of Technology. He described it as “delightfully provocative” and a “real challenge” to the prevailing school of thought that it is institutions that shape economic history. Samuel Bowles, an economist who studies cultural evolution at the Santa Fe Institute, said Dr. Clark’s work was “great historical sociology and, unlike the sociology of the past, is informed by modern economic theory.”...

[F]rom 1200 to 1800... the economy was locked in a Malthusian trap--each time new technology increased the efficiency of production a little, the population grew, the extra mouths ate up the surplus, and average income fell back to its former level. This income was pitifully low.... By 1790, the average person’s consumption in England was still just 2,322 calories a day, with the poor eating a mere 1,508.... “Primitive man ate well compared with one of the richest societies in the world in 1800,” Dr. Clark observes....

The Industrial Revolution... occurred when the efficiency of production at last accelerated, growing fast enough to outpace population growth and allow average incomes to rise....

[A]ncient wills... reveal[ed] a connection between wealth and the number of progeny.... Generation after generation, the rich had more surviving children than the poor.... “The modern population of the English is largely descended from the economic upper classes of the Middle Ages,” he concluded. As the progeny of the rich pervaded all levels of society, Dr. Clark considered, the behaviors that made for wealth could have spread with them. He has documented that several aspects of what might now be called middle-class values changed significantly from the days of hunter gatherer societies to 1800. Work hours increased, literacy and numeracy rose, and the level of interpersonal violence dropped.

Another significant change in behavior, Dr. Clark argues, was an increase in people’s preference for saving over instant consumption, which he sees reflected in the steady decline in interest rates from 1200 to 1800. “Thrift, prudence, negotiation and hard work were becoming values for communities that previously had been spendthrift, impulsive, violent and leisure loving,” Dr. Clark writes....

After the Industrial Revolution, the gap in living standards between the richest and the poorest countries started to accelerate, from a wealth disparity of about 4 to 1 in 1800 to more than 50 to 1 today. Just as there is no agreed explanation for the Industrial Revolution, economists cannot account well for the divergence between rich and poor nations or they would have better remedies to offer.... [T]he middle-class values needed for productivity could have been transmitted either culturally or genetically. But in some passages, he seems to lean toward evolution as the explanation. “Through the long agrarian passage leading up to the Industrial Revolution, man was becoming biologically more adapted to the modern economic world.”...

Dr. Clark’s view is that institutions and incentives have been much the same all along and explain very little....

“He deserves kudos for assembling all this data,” said Dr. Hoffman, the Caltech historian, “but I don’t agree with his underlying argument.” The decline in English interest rates, for example, could have been caused by the state’s providing better domestic security and enforcing property rights, Dr. Hoffman said, not by a change in people’s willingness to save, as Dr. Clark asserts.... Dr. Bowles, the Santa Fe economist, said he was “not averse to the idea” that genetic transmission of capitalist values is important, but that the evidence for it was not yet there.... He also took issue with Dr. Clark’s suggestion that the unwillingness to postpone consumption, called time preference by economists, had changed in people over the centuries. “If I were as poor as the people who take out payday loans, I might also have a high time preference,” he said....

“The actual data underlying this stuff is hard to dispute,” Dr. Clark said. “When people see the logic, they say ‘I don’t necessarily believe it, but it’s hard to dismiss.’”

IMHO, in all Malthusian economies downward mobility is the rule: that's what being rich buys you--enough food to feed your children. I am much more inclined to see virtuous circles--especially longer lifespan leading to a longer planning horizon and lower interest rates--and successful institutions driving changes in attitudes and the pace of technological improvement.

Comments

Greg Clark's new book may be right, may be wrong, but it is brilliant--the pre-industrial chapters may well be the best short treatment of the topic ever.

Nicholas Wade reviews:

Review - A Farewell to Alms: For thousands of years, most people on earth lived in abject poverty, first as hunters and gatherers, then as peasants or laborers. But with the Industrial Revolution, some societies traded this ancient poverty for amazing affluence.... Gregory Clark, an economic historian at the University of California, Davis, believes that the Industrial Revolution ... occurred because of a change... people gradually developed the strange new behaviors required to make a modern economy work. The middle-class values of nonviolence, literacy, long working hours and a willingness to save.... Because they grew more common in the centuries before 1800, whether by cultural transmission or evolutionary adaptation, the English population at last became productive enough to escape from poverty, followed quickly by other countries with the same long agrarian past....

“This is a great book and deserves attention,” said Philip Hoffman, a historian at the California Institute of Technology. He described it as “delightfully provocative” and a “real challenge” to the prevailing school of thought that it is institutions that shape economic history. Samuel Bowles, an economist who studies cultural evolution at the Santa Fe Institute, said Dr. Clark’s work was “great historical sociology and, unlike the sociology of the past, is informed by modern economic theory.”...

[F]rom 1200 to 1800... the economy was locked in a Malthusian trap--each time new technology increased the efficiency of production a little, the population grew, the extra mouths ate up the surplus, and average income fell back to its former level. This income was pitifully low.... By 1790, the average person’s consumption in England was still just 2,322 calories a day, with the poor eating a mere 1,508.... “Primitive man ate well compared with one of the richest societies in the world in 1800,” Dr. Clark observes....

The Industrial Revolution... occurred when the efficiency of production at last accelerated, growing fast enough to outpace population growth and allow average incomes to rise....

[A]ncient wills... reveal[ed] a connection between wealth and the number of progeny.... Generation after generation, the rich had more surviving children than the poor.... “The modern population of the English is largely descended from the economic upper classes of the Middle Ages,” he concluded. As the progeny of the rich pervaded all levels of society, Dr. Clark considered, the behaviors that made for wealth could have spread with them. He has documented that several aspects of what might now be called middle-class values changed significantly from the days of hunter gatherer societies to 1800. Work hours increased, literacy and numeracy rose, and the level of interpersonal violence dropped.

Another significant change in behavior, Dr. Clark argues, was an increase in people’s preference for saving over instant consumption, which he sees reflected in the steady decline in interest rates from 1200 to 1800. “Thrift, prudence, negotiation and hard work were becoming values for communities that previously had been spendthrift, impulsive, violent and leisure loving,” Dr. Clark writes....

After the Industrial Revolution, the gap in living standards between the richest and the poorest countries started to accelerate, from a wealth disparity of about 4 to 1 in 1800 to more than 50 to 1 today. Just as there is no agreed explanation for the Industrial Revolution, economists cannot account well for the divergence between rich and poor nations or they would have better remedies to offer.... [T]he middle-class values needed for productivity could have been transmitted either culturally or genetically. But in some passages, he seems to lean toward evolution as the explanation. “Through the long agrarian passage leading up to the Industrial Revolution, man was becoming biologically more adapted to the modern economic world.”...

Dr. Clark’s view is that institutions and incentives have been much the same all along and explain very little....

“He deserves kudos for assembling all this data,” said Dr. Hoffman, the Caltech historian, “but I don’t agree with his underlying argument.” The decline in English interest rates, for example, could have been caused by the state’s providing better domestic security and enforcing property rights, Dr. Hoffman said, not by a change in people’s willingness to save, as Dr. Clark asserts.... Dr. Bowles, the Santa Fe economist, said he was “not averse to the idea” that genetic transmission of capitalist values is important, but that the evidence for it was not yet there.... He also took issue with Dr. Clark’s suggestion that the unwillingness to postpone consumption, called time preference by economists, had changed in people over the centuries. “If I were as poor as the people who take out payday loans, I might also have a high time preference,” he said....

“The actual data underlying this stuff is hard to dispute,” Dr. Clark said. “When people see the logic, they say ‘I don’t necessarily believe it, but it’s hard to dismiss.’”

IMHO, in all Malthusian economies downward mobility is the rule: that's what being rich buys you--enough food to feed your children. I am much more inclined to see virtuous circles--especially longer lifespan leading to a longer planning horizon and lower interest rates--and successful institutions driving changes in attitudes and the pace of technological improvement.